The world's largest luggage company just got a lot bigger.
Samsonite has zipped up a deal to acquire luxury rival Tumi for around $1.8 billion, in what will be the largest acquisition for Samsonite since its initial public offer in 2011. The deal is expected to close in the second half of 2016 subject to shareholder approval.
"This is a transformational acquisition for Samsonite. It will meaningfully expand our presence in the highly attractive premium segment of the global business bags, travel luggage and accessories market" Samsonite's Chief Executive Ramesh Tainwala said in a statement.
Samsonite will pay US$26.75 per share in an all-cash transaction, which represents a 33% premium to Tumi's closing price on Wednesday.
Speaking to CNBC, Samsonite Non-Executive Director Tim Parker defended the cost of the deal.
"This is a wonderful brand. The opportunities to bring two bring great companies together is going to be worth a lot of value to our shareholders and we feel this is a good price," he told CNBC.
Founded in 1975, Tumi offers a line of business bags, travel luggage and accessories through 2,000 points of distribution across 75 countries.
For the year ended December 31, 2015, its net sales were US$548 million, representing a year on year increase of 4%. North America accounted for 68% of 2015 net sales, with Asia Pacific accounting for 17%, Europe, Middle East and Africa accounting for 14% and Latin America accounting for the remaining 1%.
"This is an exciting day for Tumi and all the travelers around the world who count on us," said Tumi Chief Executive Jerome Griffith.
"The team at Samsonite has a long and successful track record when it comes to acquisitions and we know they will be excellent stewards of the Tumi brand."
Samsonite has announced nine acquisitions since 2012 and says it's strategy to grow through acquisitions is working.
"This is a transaction that we had been hoping to do for a long time and it is genuinely transformative for our business." Parker said.
"I think this is going to keep us busy for quite a few months and possibly a couple of years to come, but thereafter the business has got plenty more scope for growth."